Is Beachbody a Pyramid Scheme or Scam?

PYRAMID SCHEMES / vs. / BEACHBODY

Sooooo...within my THREE years as a Beachbody coach, I've had several people ask me, "Is this one of those PYRAMID things?". Half of the time they are not even SURE what that even MEANS! haha But, I'll be straight up with you. I was one of those skeptical people who thought the same exact thing. I researched extensively to find the real facts before I jumped 2 feet into coaching. There IS a difference between a "Pyramid Scheme or Scam" and a "Legitimate MLM company". Here's the scoop!

But, first...FUN FACT: Did you know that 83% of women who make

OVER $100,000 per year work for an MLM? Yep. That's right. Ok...read on :)

FACTS from the FTC Guidelines

FTC: "Pyramid Schemes promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public."

Beachbody spends millions of dollars every single year on informercials promoting REAL products that help the public achieve REAL results.

FTC: "Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure. There are two tell-tale signs that a product is simply being used to disguise a pyramid scheme: inventory loading and a lack of retail sales."

Majority of Beachbody’s profits come from retail sales from workout programs, Shakeology, and many other supplements. (Retail sales numbers comply with the DSA--more info on DSA requirements listed below).

FTC: "Inventory loading occurs when a company's incentive program forces recruits to buy more products than they could ever sell, often at inflated prices. If this occurs throughout the company's distribution system, the people at the top of the pyramid reap substantial profits, even though little or no product moves to market. The people at the bottom make excessive payments for inventory that simply accumulates in their basements."

Some people have made the argument that Shakeology is our product that we coaches are “forced” to purchase. This isn’t the case. Coaches are NOT required to purchase Shakeology. Coaches may remain “active” coaches simply by selling retail products. If a coach sells 1-2 products every 35 days, they are considered an “active” coach. Whether a coach is “active” OR “inactive”, they are still eligible to receive retail commissions regardless. Any products coaches purchase can be returned for a full refund if not used.

We have optional lead programs for qualifying coaches who use the products. Leads are given to coaches who use and love the products. For example, Shakeology commission based leads are given to coaches who use and love Shakeology so they are able to help the customers who order Shakeology by giving them recipes, tips on how to make it, and opinions on which flavors are best. As coaches we share our experience with our customers about Shakeology. Beachbody does not give commission based leads (freebies) to coaches who are not using the products, because without knowledge of the products, it would be difficult to share experience and help the customer. Same goes for Beachbody on Demand (Live Streaming) and the Meal Planner (within our Club Membership). Would you rather be assigned a coach who is familiar with how to work the live streaming and meal planner OR a coach who has never used either and is not familiar with them? If a coach decides not to participate in this optional lead program, they are still just as capable of building a successful business as a coach who does participate in this optional lead program.

FTC: "A lack of retail sales is also a red flag that a pyramid exists. Many pyramid schemes will claim that their product is selling like hot cakes. However, on closer examination, the sales occur only between people inside the pyramid structure or to new recruits joining the structure, not to consumers out in the general public."

Aside from from the retail sales sold through infomercials, Beachbody encourages coaches to achieve “Success Club” monthly. In order to reach Success Club, coaches must help 3-5 new people with their health and fitness who are OUTSIDE of our network. This means, our income does not come solely from our coaches. It also comes from new customers monthly who are using our retail products—these customers are NOT within “our structure”.

FTC: "Ponzi scheme is closely related to a pyramid because it revolves around continuous recruiting, but in a Ponzi scheme the promoter generally has no product to sell and pays no commission to investors who recruit new "members." Instead, the promoter collects payments from a stream of people, promising them all the same high rate of return on a short-term investment. In the typical Ponzi scheme, there is no real investment opportunity, and the promoter just uses the money from new recruits to pay obligations owed to longer-standing members of the program. In English, there is an expression that nicely summarizes this scheme: It's called "stealing from Peter to pay Paul.""

This is basically saying that in a Ponzi Scheme, recruiters make commission off of sign ups with no products being exchanged. Simply profiting off of people who "buy in". Beachbody charges a $39.95 coach sign up fee, and coaches do not profit off of this sign up fee. This $39.95 sign up fee goes directly to Beachbody to start a legitimate business. Coaches do make commission off of those who sign up to be a coach IF they desire to purchase products during sign up. Purchasing products during sign up is optional. However, the (recruiting) coaches forfeit any further retail commission from these new coach sign ups because these (new) coaches receive a discount on all future products ordered (which would have been the recruiting coach's retail commission).

FTC: "Some people confuse pyramid and Ponzi schemes with legitimate multilevel marketing. Multilevel marketing programs are known as MLM's, and unlike pyramid or Ponzi schemes, MLM's have a real product to sell. More importantly, MLM's actually sell their product to members of the general public, without requiring these consumers to pay anything extra or to join the MLM system. MLM's may pay commissions to a long string of distributors, but these commission are paid for real retail sales, not for new recruits. Unfortunately, the rise in legitimate multilevel marketing was accompanied by a surge in pyramid schemes. Those schemes played off the popularity of MLM or network sales but paid more attention to networking than to selling actual goods."

Beachbody's mission is to "Help End the Trend of Obesity and Help People Live Healthier, more Fulling Lives". We thrive because of our brand name, well known products that change lives every day. The general public who purchases our products are not expected or required to join our network (or "MLM system").

"Those who are not aware of the numerous stringent requirements to become a legally compliant Direct Sales Company, should avail themselves to reading and studying the requirements necessary to become an accepted member of the Direct Selling Association (DSA). Beachbody, as a member of the Direct Selling Association (DSA) (http://www.dsa.org/), has recently become the recipient of the DSA's " Rising Star Award" (http://pledgetostayfit.com/team-beachbody-receives-the-rising-star-award-from-dsa). Companies in the DSA strive to operate the by the DSA code of ethics and spirit of excellence (http://www.dsa.org/code-of-ethics/code-of-ethics-(full-text.)”

Other Important Facts:

Beachbody holds an A+ rating with the

Better Business Bureau